3rd-Country Invoicing under Thailand-India FTA Challenged by Thai Customs

(14/2009)

Thai Customs has started to challenge historic claims to the Thailand-India FTA duty rates for imports using a third country sales structure.

After allowing for such imports since the FTA entered into effect in 2004, Thai Customs now appears to be asserting that the triangular trade is prohibited under the FTA and that there could potentially be millions of Baht in back taxes due.

The rules of origin for the Thailand-India FTA are silent on third country sales. It appears that Thai Customs view this as an implied prohibition of triangular sales, as they compare the Thailand-India FTA rules with the AFTA rules, whereby it is explicitly stated that third country sales are permitted.

We are not aware of any attempt to negotiate on this particular issue at the moment. Thus, companies that are either utilizing or planning to use the Thailand-India FTA for their triangular trade might wish to review their plans.